The latest charge against Mylan is a wonky but serious one, with the head of the Centers for Medicare and Medicaid Services confirming that the company overcharged the government and taxpayers by millions of dollars for many years and that CMS “expressly” told Mylan of this.

CMS Acting Administrator Andy Slavitt said he could not comment on the total amount of money Mylan owed the federal government as a result, though he did say the overcharging went back to 1997. Two Democratic senators said on Wednesday that the difference amounted to millions of dollars.

The False Claims Act, which lawmakers asked the Justice Department in late September to investigate Mylan
MYL, +1.91%
for violating, is the strongest weapon the government has in these types of cases, according to James Matthews, partner and litigator at Foley & Lardner.

Mylan, which has only owned the EpiPen since 2007, has long reported the EpiPen as a generic drug with multiple competitors, allowing for less rebates back to the federal government under the Medicaid Drug Rebate Program than if it were classified as a brand-name drug.

Mylan CEO: EpiPen $608 Price Was 'Fair'

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Mylan CEO Heather Bresch responds to questions from the House Oversight Committee regarding costs of the EpiPen. The company raised the list price of the allergy medication 548% over the last nine years, reigniting public outrage over drug prices. Photo: Getty

But, “EpiPen is approved under a New Drug Application (NDA) by the Food and Drug Administration (FDA), has patent protection, and has no FDA-approved therapeutic equivalents,” Slavitt said. “These facts indicate EpiPen... meets the definition of a single source or branded drug,” for which manufacturers pay a 23.1% rebate compared with a 13% rebate for generics.

The Justice Department has previously won settlements against drug companies when claiming similar misclassification, including against Mylan, according to a letter by Sens. Richard Blumenthal (D-Conn.), Chuck Grassley (R-Iowa) and Amy Klobuchar (D-Minn.).

Mylan is also being investigated for violation of antitrust law by the New York Attorney General’s office, but a False Claims Act violation is a more serious legal threat.

Slavitt said that CMS has started a “comprehensive review of our database” to identify misclassification. Though a narrow exception is available for some drugs to be called generics, “we will not be able to say definitively how many” until the review is done, Slavitt said.

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